Saturday, July 03, 2010

Why People Hate CEOs or The Obscenity of the Difference in Pay Between Workers and Bosses

This post on The Otter Limits reminded me of a story that I saw yesterday on The Drudge Report.

Headline: Walmart CEO Pay: More in an Hour Than Workers Get All Year?

From the story –
Smith, an alderman in Chicago, presented posters at a city council meeting showing that Walmart CEO Michael Duke's $35 million salary, when converted to an hourly wage, worked out to $16,826.92. By comparison, at a Walmart store planned for the Windy City's Pullman neighborhood, new employees to be paid $8.75 an hour would gross $13,650 a year.

Smith's numbers could be a bit off. Equilar, an executive compensation research firm, calculates that Duke earned just south of $20 million in 2009 and $28 million in 2008, not counting millions of dollars in potential performance awards. But the alderman argued that there's still a "sad" contrast between Duke's compensation and the wages of his employees.

"How can you go to bed at night and sleep knowing you make this kind of money and the people working for you can hardly buy a package of beans and rice?" he asked in an interview with ABCNews.com.

[...]

A study last fall by the Institute for Policy Studies, a liberal Washington D.C. research group, found that CEOs in the country's S&P 500 companies make, on average, 319 times more than the average American worker.

IPS associate fellow Sam Pizzigati said that in the 1970s, that ratio was 30 to 1.

"We've seen, over the past three decades, a tenfold-plus increase in the gap between top executives and average American workers," Pizzigati said. "That Chicago alderman is putting his finger on a very real problem in American economic life."
I’m sorry but there is something disgustingly wrong with this picture.

When I worked for Sprint, there was a CEO who made $53K a day. That is twice the average yearly wage of a call center worker (oh and at least three call centers were closed during his tenure as CEO). That is obscene.

Now don’t get me wrong, I’m all for people getting rich but it seems excessively immoral and unethical for the leader of an organization to make more in a day or an hour than his/her employees make in a year.

How is this good for the economy? How is this even good or sustainable for the business? Why in the world should a company have so much invested in one single person? That one individual will not make or break the company alone. Yes his or her leadership can make the difference between success and failure but that doesn’t mean that he/she is worth that much more than everyone else. Also, how are the employees to feel when they see things like this? Where is their buy-in? Where is their share of the success or failure? They are treated like nameless and faceless numbers and people wonder why things like quality and service have gone down the tube over the years.

Workers need to be shown that they matter. They need to be given their share of the success that they help to create (and failures as well but that part seems to already be happening like crazy). There is nothing free about this. I would go so far as to say this goes directly against the free market and capitalism. This is corporatism. This is oligarchy. This is feudalism. And it needs to be stopped.

1 comment:

Otter Limits said...

I'm not sure if I would necessarily call this oligarchy but I can definitely see some elements of feudalism in this picture.